Gas prices inch back to $3

Robert Manor, Tribune staff reporterCHICAGO TRIBUNE

Gasoline has again touched $3 a gallon in Chicago, and is closing in on that number elsewhere in Illinois.

Crude oil prices have been rising since the start of the year, from a low of $50 a barrel in mid-January to $61.86, down $1.27, Thursday. Oil costs account for about half the price of gasoline, and the price of the two usually move in tandem.

Average prices for a gallon of regular gasoline in Chicago this week ranged from $2.829 to as high as $3.004, according to AAA Chicago, with many stations in the city selling gas for more than $3.

Some analysts say consumers may now be regarding as normal what was once seen as exorbitant.

"The consumer has price amnesia," said Phil McPherson, director of research at C.K. Cooper, a boutique investment firm specializing in small oil exploration and production businesses.

"We are in a world where $3 gas is becoming the norm and people are used to it," McPherson said.

Some consumer coping strategies were in play Thursday afternoon at a BP gas station at Ontario and LaSalle Streets in Chicago, where regular was selling for $3.129 a gallon.

"This is outrageous," said Martin Rios, a passenger who said he never buys gas in Illinois.

"I live on the far South Side," Rios said. "I only buy gas in Indiana. I pay $2.75 a gallon."

His friend and driver, Curt Wilkinson, was filling the tank of a borrowed car.

"It's all relative," Wilkinson said. A Chicago native, Wilkinson lives in Exeter, England. He estimated gasoline sells there for about $6 a gallon. Wilkinson estimates because he doesn't drive in England, preferring to take public transportation or to walk.

And then there are the stoics.

"Nothing I can do about it," observed Joe Landazzi, filling the tank of a commercial van loaded high with painting equipment and several ladders attached to the roof.

Landazzi, a painter, actually does do something about high gas costs. He said he prices it into the cost of his work.

Three-dollar gasoline is a relatively new phenomenon.

"We had not hit $3 until 2005," said Nicole Niemi, spokeswoman for AAA Chicago. That was preceded by a period of gas costing more than $2, once thought to be expensive.

Oil prices have been high in recent years in part because of increased demand from China and India, shortage of refining capacity in the U.S. and geopolitical fears of instability in Nigeria and hostility in Iran.

Events around the globe make for higher transportation expenses here.

Stan Davis, manager of Chicago-based Act One Transportation, sees the fuel bills for the company's four limousines, three buses and one hearse. A limousine consumes $5 to $7 of gasoline an hour on average, he said.

"We are dealing with high gas prices and we can't pass it on to the customers," Davis said, because the limo industry is so competitive that no one wants to take the risk of raising prices.

Limo drivers often spend time parked, and could save fuel by turning off the engines of their cars. Try that wearing a dark suit in a black car on a hot day.

So there is an incentive to leave the motor running and the air conditioning on, Davis said. "They want to be cool."

Some energy experts are a bit optimistic about gasoline prices during the short term.

"Given that prices have risen much more than they typically do during the first part of this year, it wouldn't be too surprising to see prices begin to stabilize or decline over the next several weeks," the federal Energy Information Administration said this week.

Gas prices for all grades have risen an average of 32 percent since the end of January, according to American Petroleum Institute said.

But other people who follow energy issues say it is difficult to predict gas prices for the summer months.

"The experts six months ago were predicting that fuel was going to be less expensive this summer than last summer," said David Sykuta, executive director of the Illinois Petroleum Council. He said too many factors, like tension in the Middle East, make such predictions difficult.

"Gasoline may be a little less this summer and then again, maybe not," Sykuta said.

In some cases, ingenuity can replace gasoline.

Andy Sitkowski is president of Deadline Express, a delivery service. His fleet of bike messengers are, for obvious reasons, not contributing to his fuel costs.

But Deadline Express also offers service to the suburbs. He said the trick is to schedule delivery efficiently to minimize the miles driven.

"You try to bunch deliveries so they are much more efficient," he said. "If you have a good dispatcher you can work things out."